How often should a small business reconcile its accounts?
Monthly reconciliation is the standard for most small businesses. At minimum, reconcile every bank account, credit card, and loan account once per month after all transactions have cleared. This timing aligns with statement cycles and gives you accurate financial records for decision-making.
For businesses with high transaction volume or multiple payment processors, weekly reconciliation makes more sense. Restaurants, retailers, and e-commerce sellers processing dozens of transactions daily benefit from more frequent checks. Catching an error on day 7 is easier than finding it buried in 300 transactions at month end.
Cash-heavy businesses should reconcile even more frequently. When physical cash changes hands, the opportunity for errors and theft increases. Daily reconciliation of cash drawers and deposits helps identify discrepancies before the trail goes cold.
Reconciliation catches bank errors, duplicate charges, unauthorized transactions, missed deposits, and your own data entry mistakes. A $50 duplicate charge from a vendor might not stand out on a busy statement, but twelve months of those adds up. Regular reconciliation is also often the first line of defense against employee theft or external fraud. If someone skims money from a deposit, you’ll notice much faster reconciling weekly than discovering it during year-end cleanup.
Waiting until tax time to reconcile is the most expensive approach. By then, you’ve lost context on what charges were. You can’t remember if that $127 charge was business or personal. Your accountant spends hours reconstructing what should have taken minutes monthly, and you pay for that time.
Professional ongoing bookkeeping includes monthly reconciliation as part of the close process. This ensures nothing falls through the cracks and you always have accurate numbers to work with. Many small business owners in the Merrimack Valley work with an Andover, MA payroll service that also handles bookkeeping, so all accounts including payroll liabilities get reconciled together as part of a monthly routine.
The real answer isn’t just frequency but consistency. Monthly reconciliation done reliably beats quarterly reconciliation done sporadically. Pick a schedule that works for your business and stick to it.
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More Questions
What is the difference between bookkeeping and accounting?
Bookkeeping is recording and organizing financial transactions. Accounting is analyzing that data, preparing tax returns, and providing strategic guidance. Most small businesses need both, just at different levels.
Read answerWhat are the signs that my business needs professional bookkeeping help?
Common signs include not knowing your actual profitability, falling months behind on reconciliations, dreading tax season, and spending hours on books instead of running your business. If your CPA is charging extra to clean up your records, that's a clear signal.
Read answerHow do I know if my bookkeeper is doing a good job?
Look for monthly reconciliations completed on time, accurate financial statements you can actually understand, and stress-free tax preparation. A good bookkeeper catches problems before you do.
Read answerWhen should I hire a bookkeeper instead of doing it myself?
Hire a bookkeeper when the time you spend on books costs more than paying someone else. If you're falling behind, dreading reconciliations, or making decisions without trusting your numbers, you've probably passed that point.
Read answerHow much does a bookkeeper cost for a small business?
Small business bookkeeping typically costs $200 to $600 monthly for basic services. The actual price depends on transaction volume, industry complexity, and which services are included beyond basic monthly books.
Read answer